Cash transfers for social protection

Expanding the use of cash transfer programmes could encourage sustainable development and reduce dependency on emergency support in fragile states such as Somalia, experts say.

For decades, Somalia has been the recipient of emergency aid for chronic crises, such as persistent food insecurity. At present, 2.12 million people in Somalia are facing an acute food security crisis, according to the Food Security and Nutrition Analysis Unit (FSNAU).

Social protection programmes - including cash transfers - are seen as a way to mitigate this consistent need for emergency relief.

“Cash transfers can give the ability and flexibility to poor households to purchase according to their own priority needs,” Sara Pavanello, an independent researcher, told IRIN. They also give poor households the opportunity to save or invest, for example by sending children to school, reducing long-term vulnerability.

The interest in cash transfers stems in part from “frustration with the limitations of humanitarian aid, which in some contexts is being used to meet chronic need instead of acute need,” Paul Harvey, a partner at Humanitarian Outcomes, told IRIN.

“The need to respond to short-term acute needs will not go away, thus the need for food, cash, or a combination. There’s also a need to think about longer-term social protection, [which is] not a substitution [for] humanitarian aid,” he said.

The use of cash transfers in the Hunger Safety Net programme in Kenya and the Productive Safety Net Programme in Ethiopia have shown that longer-term social protection approaches offer an alternative to recurrent emergency relief, Harvey observed.

An opportunity for fragile states

Social protection measures are traditionally undertaken by governments, which administer welfare payments or otherwise maintain a social safety net.

But such tasks are daunting for fragile states like Somalia, which lacks essential institutions and infrastructure as it emerges from decades of civil conflict.

Save the Children and the international NGO Adeso have, through a pilot programme, attempted to show that international aid actors could provide social protection in Somalia - provided donors were willing to finance it.

But “the willingness of donors to finance it in the absence of a government is up for question,” Harvey said.

According to Jesse McConnell, director of Reform Development Consulting, the participation of government is essential for implementing social protection programmes in fragile states: “A primary benefit of a cash transfer programme in a fragile state - if used in conjunction with some form of government - can be the growth of the state’s legitimacy amongst its citizenry. This is especially important in the rebuilding of a collapsed state, such as Somalia, which has seen a history of fractured leadership and a virtual absence of governance.”

Social protection programmes that circumvent the role of the government could undermine the country’s recovery, he continued.

A primary benefit of a cash transfer programme in a fragile state, if used in conjunction with some form of government, can be the growth of the state's legitimacy amongst its citizenry

“Perhaps the most important consideration in setting up a cash-based social protection programme in Somalia… is the need to partner with some level of government authority rather than simply distributing cash from an external agency, thus perpetuating the perception of ‘hand-outs’… which can also easily undermine local efforts to build governing capacity and legitimacy.”

Considerations

In fragile states, a variety of factors can influence whether cash is an appropriate form of assistance.

“To be appropriate, local markets should be able to supply people with what they need. The risk of inflation should be understood and not high to the point of eroding the real value of the transfer,” said researcher Pavanello. “It is also important to recognize that, especially in fragile contexts… providing any type of assistance carries a high risk of diversion and corruption.”

Yet transparently administering cash transfer programmes can help to encourage accountability and strengthen governance while addressing vulnerability, according to McConell.

In some contexts, cash may be less prone to corruption than food assistance, simply because is less visible, while in other situations, providing people with cash may expose them to violence or theft.

“Well-suited” for Somalia

Cash transfers are widely regarded as an important aid option in Somalia.

“Somalia is surprisingly well-suited to large-scale cash programming,” Adeso executive director Degan Ali wrote in an opinion piece in Humanitarian Exchange Magazine. “Markets are robust and well-integrated,” she said, “and the country has sophisticated, long-term market monitoring systems maintained by FEWSNET [Famine early Warning Systems Network] and FSNAU, providing data on essential commodities.”

Somalia also has a highly developed remittance system; Somalis living abroad send home at least US$1 billion each year.

Cash transfers proved critical in the country last year, when food aid was unavailable. The UN World Food Programme had been banned when the famine struck south-central Somalia. “Cash transfers were the only form of assistance that aid agencies could provide to increase access to food and other basic necessities quickly,” Degan wrote.